The FT has reported this morning that Paul Ryan and his key colleagues in the US legislature have abandoned plans to introduce their corporate tax reform in that country.
They called the planned reform a border adjustment tax. Technically it is a destination based corporate cash flow tax. Either way it imposed a tax charge on importing goods into a country and let income from exports off corporation tax altogether.
There’s another upside though. This plan was created by Mike Devereux and related parties, including the ideologues at the supposedly politically neutral Institute for Fiscal Studies here in the UK, who included it in their Mirrlees Review (very much following the prescription for economists Dean Baker referred to yesterday) of what they saw to be the best direction for the future of UK taxation. Devereux et al won some political support for this idea in the UK as a result, including in the UK parliament, where in my time I have strongly criticised it when giving evidence to committees. I have also vocally opposed it at World Bank events. I now sincerely hope we have heard the last of it, and much else in the deeply misguided Mirrlees Review which deserves to be consigned to the same bin that Ryan has used for his plan.
I’ve just read the relevant chapters of Mirrlees and can’t actually see that it says that at all. The argument rather seems to be that we should only be taxing excess profits, or economic rents (rather the same thing), not a border adjustment tax at all.
Anyone care to point out where I’m wrong on this?